Professor Stephen Haseler launched his new book yesterday, “Meltdown: How the Masters of the Universe Destroyed the West’s Power and Prosperity”. (The term “Masters of the Universe” was used to describe financial executives on Wall Street during the 1980s.)

As you might imagine from the title, Stephen Haseler is fairly critical of the strategy followed by modern capitalism. Central to his argument is the decline in real wages in America over the past generation. Previous eras saw wages double every 35 years: in the last 35 years that has stopped happening. Living standards have been propelled upwards by women joining the labour market, so that a typical household has two incomes rather than one, by longer working hours and second jobs, and by borrowing. The proportion of American GDP taken up by wages fell and the proportion that was profits rose.

Not only was this the system adopted in America, but it was exported around the world. Economic globalisation enabled manufactured goods from around the world to be provided cheaply to American consumers amid the free flow of capital outside the constraints of national regulation. The US adopted a forward military strategy to protect and extend this notion of globalisation: the invasion of Iraq was intended to remake the Middle East in the American model.

Sooner or later, this system would trip up and fall over, and it has. The vast debts have to be paid back, and the American consumer has to retrench. The American middle classes are feeling the pain, in a manner to which they are not accustomed. How will they react?

An important signal will be the fate of the US car industry, which, like the banks, is facing insolvency. The recent presidential election was not only a victory for the Democrats but a victory for the north – Barack Obama represented Illinois – and that victory will be used to preserve America’s remaining industrial base, even at the cost of free trade.

The future will be not a unipolar world but a multipolar one, in which the Europeans can play a role if they choose, and in which the British can play a role if they choose the Europeans.